Canopy Growth Corp. (TSX: WEED and NYSE: CGC) is banking on Martha Stewart’s celebrity status to help it rocket past a cluttered U.S. CBD market.
On Thursday, the Canadian cannabis behemoth said it launched a new line of CBD gummies, softgels and oil drops in the states, all backed by the lifestyle mogul’s name.
Cannabidiol, or CBD for short, exploded in popularity in 2019 with American companies promoting the hemp extract as a natural way to treat ailments like pain and anxiety without the high produced by THC.
But without U.S. Food and Drug Administration regulations, Canopy has noted the market is “cluttered and confusing” with almost 3,000 CBD brands in the space.
Stewart, 79, teamed up with Canopy as an advisor in early 2019 to develop a broad range of CBD products using her 30,000 recipes published in Martha Stewart Living magazine.
Canopy expects big returns as her publication boasts over 7.3 million readers who are 91 per cent female with a median household income of US$82,175, according to media research firm Meredith.
Stewart has said she used CBD to treat her a foot injury and to treat anxiety her French bulldog Fanny suffered from. Later this year, Canopy will add a Stewart-branded line of CBD pet products, according to a statement.
“I’ve found that CBD supplements are a simple way to enhance my own health and wellness, especially when it comes to managing the stresses of daily life,” Stewart said in the statement. “I set out to create the most delicious CBD products on the market, drawing inspiration from some of my favorite recipes and flavour profiles from my greenhouse and gardens.”
Stewart added that her infused gummies, which come in flavours like huckleberry and kumquat, resemble French confections that are unique compared to other overly sweet options on the market.
US FDA regs could further shakeup crowded CBD space
Canopy says the products are developed with its own “cannabinoid scientists” to ensure its hemp-derived CBD isolate provides consistent doses.
Earlier this summer, the firm said it’s been conducting in-house research trials and working closely with the FDA to establish CBD safety guidelines and a recommended daily dose.
Canopy is confident the FDA will eventually come up with a legal definition for CBD, which is expected to significantly open up the market. However, the company has also hedged its bets by cosying up with lawmakers on Capitol Hill who could veto the FDA and provide a legislative solution for CBD through its classification as a dietary supplement.
Either way, Canopy sees long-term potential.
Cannabis market trackers at Brightfield Group estimate the U.S. CBD market could reach US$16.8 billion by 2025 if the FDA issues regulations in a reasonable timeframe.
But the research firm also noted in a recent report that hype has waned considerably in 2020 with sales projected to climb only 14 per cent this year after soaring 562 per cent in 2019. Brightfield forecasts US$4.7 billion in sales in 2020 after reporting US$4.1 billion in sales last year.
Canopy sees opportunities for growth with the CBD-curious demographic, citing that 86 per cent of Americans have heard of the wellness extract but only 18 per cent of people have tried it.
“We are committed to leading the CBD industry by providing trusted brands, which is why we’ve chosen to collaborate with Martha Stewart, someone who people turn to for advice on living well,” Canopy CEO David Klein said in the statement.
The company highlighted earlier how weakly positioned many U.S. CBD companies are today: 94 per cent have sales below $1 million.
Brightfield says the pandemic has led to a “significant extinction event” for hundreds of small CBD brands and increased consolidation in 2020.
Charlotte’s Web Holdings, Inc. (TSX: CWEB) remained the number one U.S. CBD company in the first quarter of this year, followed by Medterra and Green Roads, according to Brightfield.
Read more: Revenue growth stagnates for Charlotte’s Web
Top image via Canopy